Publications, opinions, and speeches
Five good ideas for income supports in a post-CERB Canada
Published on 29/07/2020
To say that the past four months have been full of change is an understatement. But here’s one more thing we need to change.
If we are going to shape a future that recognizes the inherent dignity in everyone, and reduces inequities across race, gender, and income, we need to think beyond traditional economic and social policy thinking from decades past, and move into a post-CERB world. To do this, we need to chart out our path, and think collectively about the ideas and principles that will be our north star as we work to strengthen our social safety net.
To start, there is one old idea that needs to go—that the availability of supports such as the Canada Emergency Response Benefit (CERB) has hampered the resurgence of the economy and labour market. This idea is predicated on the notion that you can only have one or the other—a strong income support system or a thriving economy. This is a false dichotomy, and our post-pandemic recovery requires us to move past this narrative.
While people typically focus on the size of government to justify cuts in public services, a post-CERB social safety net requires us to think about the shape, not size, of the net. How malleable is it? Will it help meet the needs of a diversity of people? Is the net strong enough to prevent it from tearing? How can we ensure that employers play their crucial role in providing adequate wages and benefits?
To ensure that we have a strong social safety net, we have to ensure that we have the many threads needed to create a net. Here are five ideas that can help provide the income supports we need for our post-CERB social safety net:
1. Strengthen the Canada Social Transfer
The Canada Social Transfer (CST) is the primary federal contribution to provincial and territorial governments for their social programs related to social assistance, post-secondary education, and programs for children. While there have been some focused increases in federal transfers to provinces and territories for post-secondary education and children’s programming, no such increase has taken place for social assistance. And this has meant that the federal government has been absent in focused investments and policy for people receiving social assistance.
While the federal government’s transfers to provinces and territories have steadily increased over time, the proportional amount for the CST—relative to the Canada Health Transfer (CHT)—has decreased. Our own analysis shows that if the federal government maintained the funding ratios between the Canada Health Transfer and CST at 2004 levels, the federal government would be investing an additional $6.5 billion dollars into the CST in this fiscal year alone.
That’s a lot of funding that could be going to support those living in deep poverty across Canada.
How we use any increase in CST money, and how we enact accountability mechanisms are subjects that require examination and consultation. Should rates be increased so that they are tied to a poverty measure or to the minimum wage? How can social assistance programs decrease their administrative burden on recipients? These are the types of questions that we need to answer, quickly, so that we reduce the depth of poverty in Canada.
2. Modernize and broaden access to Employment Insurance
The CERB’s design, eligibility criteria, and delivery mechanism are reflective of policy choices that aim to get around the failings of Canada’s Employment Insurance (EI) system. Put bluntly, the EI system would not have been able to respond to the need created by the COVID-19 economic downturn. As we work to create a post-CERB social safety net, we need to modernize and broaden access to EI.
In 2017, about two-thirds of workers who contributed to EI were actually eligible for EI. Among low-wage workers, just 45 per cent qualified for benefits.
Contributory programs—like EI or the Canada Pension Plan—are insurance programs, there for you when you need to access to them. They are funded through premiums employers and employees pay, and are different from other programs that are funded through tax revenues. As an insurance program, the idea that people are contributing to EI but cannot collect benefits should be a cause for concern for all workers.
To help support workers in a post-CERB world, we need to improve eligibility for EI and also increase how much of a person’s earnings EI actually replaces. We also need to pay attention to how different sources of income—from work, EI, and other income supports—all work together to ensure that people have incomes that enable them to live a life with dignity.
3. Design and implement a refundable working-age tax credit
Although the labour market was growing for years before the COVID-19 pandemic, the level of poverty among working-age single adults has remained stubbornly persistent. Furthermore, 7.6 per cent of working-age adults are considered to be working poor, and are likely to be in unstable jobs with unpredictable hours and few work-based benefits.
We need to develop policy mechanisms that both reduce the depth of poverty, and stabilize the incomes, of low-income working-age adults. Just as the Canada Child Benefit and Old Age Security have been instrumental in reducing poverty amongst families with children and seniors, we need to create a working-age refundable tax credit that helps reduce poverty amongst working-age adults.
To do this, we need to understand how a working-age refundable tax credit would interact with other income-tested supports, including social assistance, EI, and other income-tested tax credits and benefits. Furthermore, whether this credit is designed to increase incomes amongst low-income working-age adults, or stabilize the incomes of workers who are precariously employed, we have to ensure that we have the administrative systems necessary to deliver benefits to people in a timely and dignified way.
4. Build a modernized data collection and administrative system
If there is anything that the CERB has shown us, it’s that sophisticated policy ideas and modelling are only as good as the mechanisms that deliver the support.
In a post-pandemic world, one where we prioritize equity, we need to be able to understand and respond to labour market fluctuations. Who is facing a decrease in work? When are people losing their jobs? Where are communities losing jobs? Where are the costs of living rapidly surpassing local incomes?
The dearth of widely available and accessible employment and income data prevents us from developing good social policy. Just like up-to-date health data has helped us be responsive to the changing conditions of the pandemic, up-to-date employment information can help policy-makers ensure that they have the information necessary to make evidence-based policy decisions and administer benefits. Not doing this would be akin to us not knowing what COVID-19 case data looks like in real-time, and yet expecting the healthcare system to grow capacity as needed to support those who fall ill.
As our economy, labour market, and society adjusts to our post-pandemic world, we need to be able to stabilize and support the incomes of families across Canada fairly automatically. For example, the blunt on/off switch of the CERB (so that people are no longer eligible for the CERB after $1,000/month in self-reported earnings) is not about good policy design—it’s about the limitations of our employment data collection and income support administration system.
A modernized income support system—whether it’s social assistance, EI, a working-age refundable tax credit, or something else—needs to be able to ensure that total incomes are enough to live a life of dignity, do not create delayed claw-backs in income, and, unwittingly, create disincentives to work through high marginal effective tax rates. And it needs to be able to calibrate the support provided to people simply, fairly, and quickly.
5. Articulate what the principles of the human right to social security looks like
Foundational to all of these ideas is the recognition that the progressive realization of economic and social rights is critical to the well-being of society.
The articulation of principles that safeguard our economic and social rights—and, in particular, social security—is the north star that must guide us in our work to strengthen our social safety net. What does an adequate and accessible social architecture look like? How do we create the scaffolding of this architecture so that it delivers stronger income supports and in-kind benefits (like housing and prescription medication coverage)? How do we ensure that we’re making the fiscal policy decisions needed to strengthen our social safety net and protect the dignity of each and every person, leaving no one behind?
To guide the development of these principles, we need to fundamentally ensure that people with lived and living experience of poverty and income insecurity are at the centre of policy-making. What works for people? What doesn’t? What are the barriers to accessing support?
Failing to put human rights at the centre of our efforts would be an abdication of our collective responsibility. We can’t determine the shape and size of our income support system if we don’t know what we are collectively trying to build. To help strengthen our systems we first have to do the hard work of answering what principles underpin our social safety net.
As we move closer to the phasing-out of the CERB, debates around the future of our social safety net—and income supports in particular—are going to intensify. Do we have the right supports? Can we afford them? Can we afford not to have them? Healthy debate is necessary. But we have to turn the debates into action.
This isn’t easy work, and will require a lot of persistence, humility, understanding, and courage. Do we have the resolve to build the necessary systems for a strong and nimble social safety net? Do we have the courage to clearly articulate what is necessary for everyone in Canada to realize their economic and social rights? As we move into the next stage of the COVID-19 pandemic and beyond, Maytree will be working on these five areas. With this work, we hope to contribute to a society that realizes each person’s economic and social rights.
To weave a stronger social safety net will require our collective imagination and teamwork. Now’s the time to show that we truly are in all of this together.